Ovo to cut up to 2,000 jobs

Ovo Energy is to cut up to 2,000 jobs as part of its latest round of redundancies.

The Unite union said the company announced plans to its staff on Thursday morning (13 January) to axe between 1,700 and 2,000 roles – more than a quarter of its workforce of 6,200 – as the energy crisis continues to grip the sector.

Ovo was making heavy losses well before the recent spikes in wholesale energy costs. In 2020, the company made a £141 million loss after the pandemic forced it to accelerate the integration of SSE’s retail arm, bringing forward some of the associated costs.

In response, Unite has accused Ovo bosses of “blundering and plundering” the company in recent years.

Following Ovo’s acquisition of SSE, Unite represents around 3,000 staff at Ovo, mainly consisting of customer service roles, meter readers and installers.

Unite general secretary Sharon Graham said: “We will do everything in our power to defend our members’ jobs. All and every option will be on the table.

“As a first step the company must now open the books to union experts. We will not sit by and watch our members being made to pay the price of the pandemic.”

Unite national officer for energy, Simon Coop, added: “We warned the directors about blundering into the SSE takeover.

“In recent years the same directors have plundered the accounts for amounts estimated to be touching £6 million.

“So, the company must be subject to severe scrutiny before the union decides on our next moves, but if they move to compulsory redundancies they will be fully opposed by the union.”

Sue Ferns, senior deputy general secretary of the Prospect union, said: “These job losses at Ovo are a further result of the crisis in energy retail. The government needs to urgently look at wholesale reform of the energy retail market including bringing it under local public control. Consumers and workers are paying the price for a system that simply does not work.

“We hope that Ovo is able to stick to its promise to limit losses to voluntary redundancy. Prospect will be working with the company to mitigate as far as possible the impact of this decision on our members.”

Utility Week contacted Ovo for a response but the company declined to comment.

Ovo previously announced in May 2020 that it was cutting 2,600 jobs, citing the pandemic as pushing more customers online and reducing demand for some roles.

Tim Speed, energy and insolvency specialist at the law firm Shakespeare Martineau, said: “Ovo’s decision to make redundancies shows the severity of the UK’s energy crisis. As the third largest energy supplier in the UK, this news highlights the extent of the financial pressures the industry is facing as a whole. Alongside Bulb’s special administration last year, it’s clear that it isn’t just small suppliers that are facing challenges.

“This isn’t a case of a big energy company profiteering. It’s one of a business having to make difficult decisions in uncertain times. Well run businesses have to be proactive, particularly at times like these, in order to protect themselves and their customers. Unfortunately, sometimes these decisions are hard to make, and this latest decision will come as a blow to many of the employees involved.”

John Cullen, business recovery partner at accountancy firm Menzies LLP commented: “The energy supply sector is in crisis and even well-run companies, such as Ovo Energy, are being forced to take drastic measures to reduce their cost base especially given their acquisition of SSE.

“A government-backed solution is urgently needed to support the sector and if that means authorising a rise in the consumer price cap in order to allow suppliers to offset some of the rise in wholesale and gas prices, then so be it.

“The recent decision to prop up Bulb Energy with a £1.7 million taxpayers’ loan through a Special Administration, has set a dangerous precedent that could prove very costly indeed in the coming years. It is clear that the current situation is not sustainable.”